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| Investing
In Africa Can Be Quite A Challenge |
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| June 2005 |
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| Geography |
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| Kenya lies
in the Eastern part of the African continent with an area of 582,646 square
kilometers (slightly smaller than the size of Texas). The country
is nearly shield-shaped, its northern part is broader while the southern
part tapers out to a tip. The equator runs midway, almost dividing the
country in two equal halves. Its neighbors in the region are: |
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i)
Ethiopia to the north
ii)
Sudan to the Northwest
iii)
Uganda to the West
iv)
Tanzania to the south
v)
Somalia to the East. |
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| The Indian
Ocean borders the country in the Southeast. |
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| Topography |
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| Kenya can
be divided into several regions of lowlands and highlands. These are: |
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a)
The coastal plain - a region of high temperatures bordering the Indian
Ocean.
b) Nyika Plateau
- This the safari country that occupies most of Kenya. The region is dry
with little and sometimes unreliable rainfall.
c)
The Highlands - situated in the central part of Kenya and divided into
two parts by the Great Rift Valley, the Eastern highlands and Western highlands.
This region receives heavy and reliable rainfall throughout the year.This
is the breadbasket of the country with a lot of farming activities.
d)
The Rift Valley straddles the country north to south dividing the highlands
into two and has scattered volcanic hills and lakes. The region is dry
to the north and south with the central rift receiving adequate rainfall
due to its hilly nature. In the south rift are to be found the Maasai and
there is grassland vegetation.
e)
The lake region where the western highlands fall gently towards the shores
of Lake Victoria (second largest fresh water lake in the world). This is
a region of high temperatures and high rainfall. |
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| Climate |
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| Kenya lies
across the equator and receives two rainy seasons in a year because
of the sun’s movement across the equator twice in a year, one from about
March to May and the other from September to November. Kenya has a highly
diversified topography that influences local climatic conditions with the
highlands having heavier rainfall than the lowlands. The lowlands have
high temperatures while the highlands have a much cooler climate than most
expect from a tropical climate. The north and eastern parts of the country
have a semi-desert climate with cloudless skies, high temperatures and
very low rainfall. The coastal region and lake Victoria region have high
temperature and high humidity throughout the year and high rainfall. |
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| Brief History |
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| Kenya has
old archeological sites which is why archaeologists call it the ‘Cradle
of Mankind’. The Kenyan coast through its links with the Indian ocean
trading system has had contacts with the outside world for the last 2000
years and this is apparent from the distinct architectural design with
some towns like Lamu preserved as world heritage sites. |
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| The history
of modern Kenya can be traced back to 1895 when the country was declared
a British Protectorate and later in 1920 as a British Colony. Colonial
rule saw land divided into racial and tribal areas which created tension
and was a great catalyst in the struggle against colonial rule. Land reform
in the dying years of colonial rule saw the emergence of a strong middle-class
in Kenya, which combined with a strong indigenous entrepreneurial spirit,
ensured that Kenya enjoyed peace and strong political stability compared
to its neighbors in the region in its 41 years of independence. Kenya remained
a British Colony until 1963 when it attained independence under the leadership
of Mzee Jomo Kenyatta; the first president after Kenya became a republic
in 1964. Mzee Jomo Kenyatta served as President until his death on August
22nd 1978 and his Vice President Daniel Toroitich Arap Moi succeeded him. |
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| Daniel Moi
served as president until his retirement in 2002 under the constitution,
which after amendment in 1992 allowed a sitting president to serve a maximum
of two five-year terms. The exit of Daniel Moi after 24 years as president
of the country also saw the exit of KANU, the political party that governed
the country from 1963 to 2002. KANU was replaced by the NARC party, which
is a coalition of 16 different parties that coalesced to oppose KANU. |
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| Government |
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| Kenya has
a hybrid of the Westminster parliamentary system and a strong presidential
system with the President serving as both head of state and head of government. |
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| Executive |
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| The President
serves a maximum of two five-year terms under the constitution and appoints
his cabinet from the members of Parliament. The president also appoints
his Vice-President who is the Leader of Government business in Parliament.
The current president is Mr. Mwai Kibaki elected in 2002 as a compromise
candidate of the various opposition parties and the Vice-President is Mr.
Moody Awori. |
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| The President
heads a government of national unity consisting of 30 ministers picked
from the various parties in Parliament including the former ruling party
KANU. This was a move to quell the persistent wrangling in the coalition
of parties under the National Rainbow Coalition (NARC) though this has
been challenged in the constitutional court. |
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| Legislature |
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| The unicameral
National Assembly sits in the capital Nairobi and consists of 222 members
of which 210 are elected to a term of 5 years from single member constituencies
and the remaining 12 are nominated according to Party strength. Kenya has
a vibrant multi-party democracy with the elections hotly contested every
five years. The last general elections held in 2002 saw power transferred
peacefully from KANU the single party that had ruled the country since
independence to a new coalition of parties NARC which won 59% of the Parliamentary
seats (130 out of 222), KANU retained 68 seats and other smaller parties
shared the remaining 12 seats. |
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| Judiciary |
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| The judiciary
is consists of the Court of Appeal as the highest court with nine judges,
the High Court with 45 judges and various subordinate courts with 230 magistrates
spread out across the country including special Kadhis’ (Islamic). |
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| Arising
from its colonization by the United Kingdom, the courts in Kenya have followed
the English common law system and in many respects English jurisprudence,
statutes and case law are applicable in contracts, commercial and company
law, and family law. |
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| People |
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| Kenya
has a very diverse population estimated at 32 million people that includes
the major language groups of Africa and a small non-African populations
of Asian, Europeans and Arabs to be found in the urban centers and cities
which contributes to the cosmopolitan culture. The country has 43 ethnic
groups with more than 40 local ethnic languages and dialects and different
local cultures. However, English is the official language used in the government
offices and the court and is spoken quite widely with literacy in English
at around 65%. The national language and lingua franca is Swahili which
is spoken throughout East Africa. |
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| Religion |
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| Christianity
is the dominant religion in Kenya. Kenyans are very spiritual and there
are many churches and Christian communities throughout the country. Roman
Catholics are around 30% of the population and around 40% of the population
is Protestant. The Muslim faith has 20% of the population and is centered
in the coastal region and northeastern region among the Somali people.
Other communities such as the Maasai continue to practice indigenous beliefs.
Even with the growth of Christianity traditional/ indigenous beliefs still
have strong influence and various traditional practices continue to be
upheld alongside Christianity |
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| In major urban
centers are to be found Hindu temples catering to the Asian community;
Nairobi also hosts a Buddhist temple and various meditation centers. |
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| Economy |
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| Even though
less than 10% of the land is arable, agriculture continues to be the mainstay
of the economy with about 75% of the work force engaged in agriculture,
mainly as subsistence farmers. The main agricultural exports are tea, coffee,
horticulture and pyrethrum while products such as sugarcane, wheat, maize,
rice, dairy products and meat products are produced for the domestic market. |
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| The horticultural
sector has been a key area of growth in the 1990s with Kenya emerging as
the biggest flower producer in the world. In the highlands are to be
found vast estates of tea and coffee with horticulture grown under irrigation
in such areas as Naivasha in the Rift Valley. The major cities of Nairobi,
Mombasa and Kisumu host the industrial sector which is concentrated in
grain and sugar milling, motor vehicle assembly and production of motor
vehicle spare parts, production of cement, beer, soft drinks, cosmetics
and pharmaceuticals, petroleum products, paper and packaging products.
The textile industry is located in Export Processing Zones exporting to
the United States under the Agoa program. |
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| In the 1990s
the Kenyan economy was subjected to ‘shock therapy’ through the
implementation of Structural Adjustment Program prescribed by the World
Bank and International Monetary Fund (IMF) which saw the country move to
a free market economy with the abolition of foreign exchange controls,
price controls and interest rates controls. The effects of this transition
are still felt today in the form of high interest rates and subsequent
loan default. |
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| The transition
is yet to be completed with the new government under the leadership of
President Mwai Kibaki resuming cooperation with World Bank and IMF to begin
and ambitious economic reform program. The new government has embarked
on reform initiatives bridging the budget deficits and deregulating and
the privatization of state run enterprises, rehabilitating and building
infrastructure which is creating greater business opportunities for any
well-informed investor who is a keen watcher of the African market. Wages
remain low, inflation has been contained below 10%, and interest rates
now hover around 13-20%. The renewal of donor involvement has provided
renewed hope for reversal of the slow economic growth. |
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| A lot of
potential exists for new ventures in ICT, computer stationery, infrastructure
and real estate, energy and power utilities, mobile telephony. Good business
ideas and capable management are what’s in short supply. |
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| In March 1996,
the presidents of Kenya, Uganda and Tanzania re-established the East African
Cooperation (EAC). The EAC’s objectives include harmonizing tariffs and
customs regimes, free movement of people, and improving infrastructure
in the East African region. In March 2004, the three East African countries
signed a Customs Union Agreement that came in to force in January 2005.
The Customs Union will soon incorporate Rwanda and Burundi bringing together
a market of over 80 million people. |
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| Money |
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| The liberalization
of the economy in the 1990s resulted in a healthy foreign exchange market.
The market exchange rate has stabilized with the Kenyan shilling becoming
freely convertible against major currencies. |
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| The Kenyan
currency the Shilling has denominations of 1-shilling coin, 5-shilling
coin, 10-shilling coin, 20-shilling coin, 40-shilling coin, 50-shilling
note, 100-shilling note, 500-shilling note and 1000-shilling note. |
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| The current
exchange rates for the major world currencies are: |
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I US Dollar
74.7 Kenya shillings
1 Euro 96.4
Kenya shillings
1 Sterling
Pound 140.5 Kenya shillings
1 South African
Rand 12 Kenya shillings
100 Japanese
yen 69.8 Kenyan shillings
1 Canadian
Dollar 61.3 Kenyan shillings
1 Singapore
Dollar 44.5 Kenyan Shillings
1 Australian
dollar 57.5 Kenyan Shillings |
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| Corruption |
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| Corruption
has been quite endemic in the past with major scandals resulting in the
suspension of donor funding by the World Bank and IMF. However the new
National Rainbow Coalition (NARC) government has embarked on sustained
program to eradicate the vice. It has enacted the Anti-corruption and Economic
Crimes Act and Public Officer Ethics Act in May 2003 aimed at fighting
graft in public offices. Other reforms in the judiciary saw 18 senior judges
and over 50 magistrates sacked on allegations of corruption. The new government
continues to be dogged with allegations of high corruption especially in
public procurement in the sensitive and often secretive defence and security
departments. Reforms are under way in the public procurement that will
see these departments opened up to public scrutiny and open audit. |
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| Overall there
is a remarkable effort to fight and eradicate graft in public offices and
this has seen a steep decline in petty corruption with almost all government
offices maintaining anti-corruption desks to deal with complaints of corruption. |
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| Culture |
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| Understanding
The Kenyan Way Of Life |
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| Kenya is
a country of diverse ethnic and cultural diversity. In the urban areas
you will find a completely western culture; the same urban fashion you
would find in any big city in the world. In the rural areas and remote
parts of the country, people are living in their traditional way of life,
looking after cattle, farming their plots of land, doing laundry in a stream.
As urbanization spreads, attracting people to the urban and western lifestyle,
fewer and fewer Kenyans are living in the traditional setting. |
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| On the
whole, Kenyans are an incredibly warm and friendly people and as you socialize
with them you will delight at the friendliness of the people, their warm
smiles and their easygoing nature. This is best exemplified by the
‘hakuna matata’, which simply means ‘no worries’ and that’s how most Kenyans
lead their lives. One of the most noticeable things as one travels around
the country is the large number of people on the roads. Everywhere even
on long lonely stretches of highway you find people walking or riding on
their bicycles, women carrying loads of firewood tied to their backs, people
seated together in urban centers. The people go on about with their daily
lives in an easygoing nature. |
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| Kenyans
love music and in every village you find people listening to small pocket
radios. Music and dance are a cherished part of Kenyan culture and play
an integral role in social and religious life. People love to dance
to the rhythm of music and in most urban centers you’ll find young people
clubbing to
latest contemporary dance music known as ‘kapuka’. In
the western parts of Kenya, the popular style is benga dance music
supplemented by traditional wind and stringed instruments. You’ll find
music even on the ‘matatus’ the multi-colored and individually decorated
and named public transportation mini-buses ever present along the roads. |
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| Kenyans
also love beer almost as much as they love dancing and the most thriving
venture during the hard economic times was the local brewing industry and
pub business. The pubs in Nairobi and major urban centers, until a
recent crackdown, used to be open 24 hours day. The national beer is excellent
and is called Tusker beer. Various local brews exist including traditional
liquor such as mnazi brewed from the coconuts found on the coast,
busaa brewed in western Kenya from sugarcane and muratina, in central
Kenya the beer is brewed from fruits and honey. Kenyans love to meet together
and celebrate any event over their beer and nyama choma (barbecued
meat). |
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| The national
motto of Kenya ‘harambee’ meaning, “pull together” also captures another
key aspect of Kenyan culture that calls for a spirit of working together
as a community in order to improve the well being of the villages.
In that spirit hundreds of volunteers in the villages come together to
build clinics, schools, gabions to prevent soil erosion, and collect funds
to offset medical bills and even send students for further studies abroad. |
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| Kenya And
Foreigner Relations |
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| In the colonial
times white settlers led an elite lifestyle enjoying close economic ties
with the government and offering employment to people in the farms and
light industry. On one hand missionaries and other charitable institutions
offered medical services and schooling to indigenous people. Arising out
of the colonial experience, many Kenyans have come to expect financial
support from foreigners. When traveling across the country in the rural
areas as a foreigner you may be annoyed by the constant begging and selling
of souvenirs whenever you stop, or you may just be delighted by the friendliness
and warm reception accorded to foreigners. It’s important to bear in mind
that the local populace in rural areas tends to view most foreigners as
missionaries, aid workers or tourists. If you do not hold yourself to either
or all of the three then it is pretty easy to make your way around. In
Nairobi, you will find the normal hustle and bustle of a modern city with
everyone pursuing their own affairs. |
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| Social
Mannerisms And Niceties |
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| In greeting
people always try and give out a firm handshake, most local people find
it insulting to be given casual greetings like ‘Hi?’ Even on the streets
of Nairobi people tend to stop and catch up and happily chat right on the
pavements. In trying to make people open up it’s advisable to carry
out conversation even a quick chat or joke; it eases tension and makes
you as a foreigner more acceptable. Intimate greetings are frowned upon
though it’s okay to hug in public, but greetings should not be extended
to kissing perhaps only a gentle peck on the cheek for women. In Nairobi
and other urban centers just take normal precautions that one would normally
take when visiting major cities: beware of tricksters and fraudsters and
do not take things at face value. |
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| Something
important to note, in African culture people do not maintain continuous
eye contact. As you converse with people you will find them avoiding
a direct glare into your eyes, which should not be taken as sign of dishonesty
or lack of confidence. Maintaining continuous eye contact makes people
feel intimidated, like you are sizing them up and in most cases local people
will not open up to conversation if you hols eye contact. It’s part of
the local culture for conversations to be carried out among people of the
same age group. Conversations across the age groups is carried out with
great modesty and respect especially for older people. It’s normally considered
rude and disrespectful to talk back to older people or interrupt their
speech or stare into their eyes, so typically people in same age group
will open up to conversation with one another and hold back when talking
to people younger or older than themselves. Just to illustrate this generational
gap: when in Kenya you’ll hear a language spoken almost exclusively by
the younger members of society known as Sheng, a mixture of Swahili
and English along with a fair sprinkling of other languages. |
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| Overall,
you just need some time and patience to understand the culture and the
different types of people in the country. For example, in the Northeastern
province which is dominated by Somali ethnic groups, you find a very strict
dress code. In the coastal regions, people are accustomed to talking with
visitors from other cultures and they are very welcoming; this is called
Mombasa raha - meaning it’s one joyous place. In Nairobi and its environs
you have to be street smart; when a deal is too good think twice. In some
areas - the north and south of the country and especially among the Maasai,
Turkana, Samburu groups - people still lead their lives in the traditional
way: simple and full of content. Kenya is magnificently diverse and you
have to see in order to experience its ever-changing face. |
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| To contact
James Click Here |
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